Tax incentives shall be considered for investment expansion projects under the revised Law on CIT No.32/2013/QH13 take effective from 01 Jan 2014.

 The investment expansion project is not eligible for tax incentives even if the production activities of enterprises enjoy tax incentives under the provisions of Law on CIT No.14/2008/QH12 and Clause 3,Article 18 of Chapter VI of Circular No. 123/2012/TT-BTC, since 2009. This provision applies even where the project expanded into the field of environmental socialization.

 However, tax incentives shall be considered for investment expanion projects under the revised Law on CIT No.32/2013/QH13 take effect from 01 January 2014.

Tax incentives be considered for investment expansion project

 Any enterprise with a project for investment and development of an investment project currently operating in a sector or geographical area entitled to CIT incentives as prescribed in this Law which expands its production scale, raises output [or] renovates production technology (investment expansion) and satisfies one of the three criteria prescribed in this clause may choose tax incentives in accordance with the currently operating project for the residual term (if any), or exemption and reduction of tax on that part of the increased income due to the investment expansion. The duration of tax exemption and reduction applicable to increased income from investment expansion as prescribed in this clause shall equal the duration of tax exemption and reduction applicable to new investment projects in the same sector [or] geographical area of CIT incentives.

 An investment expansion project prescribed in this clause must satisfy one of the following criteria:

 a) The prime cost of additional fixed assets when the completed project is commissioned must be at least twenty billion VND in the case of investment expansion projects in sectors entitled to CIT incentives pursuant to this Law, or ten billion VND in the case of investment expansion projects implemented in geographical areas with difficult or specially difficult socio-economic conditions as prescribed by law;

 b) The ratio of additional prime cost of fixed assets must be a minimum twenty (20) per cent of total prime cost of the fixed assets prior to such investment;

 c) Additional designed output must be at least twenty (20) per cent of the designed output prior to the investment.

 If a currently operating enterprise invests in expansion in a sector or geographical area entitled to incentives pursuant to this Law but does not satisfy one of the three above-mentioned criteria, then it shall be entitled to incentives applicable to the currently operating project for the residual term (if any).

 An enterprise entitled to tax incentives for investment expansion must conduct separate cost accounting for the increased income from the investment expansion; and if it fails to do so, then income from the investment expansion shall be fixed as a ratio of the prime cost of fixed assets of the new investment after commission for production or business over the total prime cost of fixed assets of the enterprise.

 The duration of tax exemption and reduction under this clause shall be calculated from the year the investment project is completed and commissioned for production or business.

 The tax incentives prescribed in this clause do not apply to investment expansion as a result of merger or acquisition of an enterprise or currently operating investment project.

 The Government shall provide detailed regulations and guidelines for implementation of this article of tax incentives for investment expansion project.

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